Wall St. hits record highs on strong technology, health stocks

Traders work on the floor of the New York Stock Exchange (NYSE) in New York, U.S., June 2, 2017.Brendan McDermid

NEW YORK (Reuters) - U.S. stocks rose on Monday, with the S&P 500 and the Dow hitting record highs with growth sectors such as technology in favor again as investors appeared to regain confidence in the economy after upbeat comments from Federal Reserve officials.

Nasdaq's biotechnology index .NBI rose 2.5 percent in its biggest one-day gain since February while the S&P's healthcare index .SPXHC had a record-high close.

Amazon.com's (AMZN.O) Friday announcement that it would buy Whole Foods (WFM.O) and an upbeat tone from Federal Reserve speakers seemed to help reassure investors after the U.S. central bank's rate hike last week, according to J. Bryant Evans, portfolio manager at Cozad Asset Management, in Champaign, Illinois.

"It looks like a bet that interest rates, such as the 10-year yield, are bottoming out," said Evans. "It's a resumption of this idea that the economy is in decent shape."

He added that a "push in M&A tends to propel the market" and that the Amazon/Whole foods $13.7 billion deal was a "tangible sign the mergers and acquisition environment is pretty good right now."

The Dow Jones Industrial Average .DJI rose 144.71 points, or 0.68 percent, to end at 21,528.99, the S&P 500 .SPX gained 20.31 points, or 0.83 percent, to 2,453.46 and the Nasdaq Composite .IXIC rose 87.26 points, or 1.42 percent, to 6,239.01.

The S&P's financial sector .SPSY was also one of the benchmark's strongest gainers with a 0.98 percent rise after New York Federal Reserve President William Dudley said U.S. inflation was a bit low but should rise alongside wages as the labor market continues to improve, allowing the Fed to continue gradually tightening monetary policy.

The Fed commentary last week had surprised investors who expected more caution after some weak U.S. economic data.

"My sense is investors must be looking at this as a pro-growth belief that perhaps Dudley sees underlying strength in the economy that the data doesn’t show right now. The Fed’s base case is that this is just kind of a soft patch and we will continue to cycle higher," said Jack Ablin, chief investment officer at BMO Private Bank in Chicago.

FILE PHOTO: The Apple logo is seen on a computer screen in an illustration photo taken in Bordeaux, France, February 1, 2017.Regis Duvignau/File Photo

The S&P technology sector .SPLRCT finished up 1.7 percent after its second straight weekly decline, which was triggered by fears of stretched valuations. Tech stocks have led the S&P 500's 9.6 percent rally this year.

"Investors were temporarily chased from the space but many companies in the sector offer growth which is difficult to find in the market as a whole," said Mark Luschini, chief investment strategist at Janney Montgomery Scott in Philadelphia.

Apple (AAPL.O) rose 2.9 percent to $146.34, providing the biggest boost to the S&P followed by JPMorgan Chase (JPM.N), which rose 2.2 percent to $88.07.

The S&P 500 bank subsector .SPXBK rose 1.3 percent.

The two biggest boosts for the biotechnology index were Biogen Inc (BIIB.O) and Clovis Oncology (CLVS.O).

Biogen ended up 3.5 percent to $260.54, after it was upgraded to "neutral" from "sell" at UBS.